The long-term goal of this work is to understand how the RNA interference (RNAi) pathway regulates heterochromatic gene silencing in fission yeast. RNAi is a wide spread silencing mechanism that acts at both the posttranscriptional and transcriptional levels and is triggered by double stranded RNA molecules that are processed to small interfering RNAs (called siRNAs). SiRNAs guide the inactivation of complementary target nucleic acids by effector complexes. Our laboratory has purified one such effector complex that either directly or indirectly targets DNA for assembly of epigenetic heterochromatin domains. This complex, which we have termed RITS (RNA-induced [nitiation of Transcriptional Gene Silencing), contains the Ago1, Chp1, and Tas3 proteins and physically links the RNAi pathway to heterochromatin. The Ago1 subunit is conserved from yeast to human and its homologs form the core subunits of another type of effector complex that uses siRNAs to target mRNA for inactivation. Chp1 is a heterochromatin structural protein that associates with lysine 9-methylated histone H3, a conserved marker of heterochromatin. In addition, the complex contains siRNAs that match centromeric DNA repeats where heterochromatin is assembled. The goals of this proposal are to understand how RITS targets specific chromosome regions for heterochromatic inactivation and to perform a biochemical dissection of the mechanism of RNAi-mediated heterochromatin assembly. The conservation of RNAi and heterochromatin proteins suggests that the principles developed here for the fission yeast complexes will apply in other settings. A basic understanding of the role of RNAi in assembly of epigenetic chromatin domain will not only provide a frame work for understanding how the process can fail, but also provides the substrate and knowledge to design therapeutic strategies based on intervention.